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  • Writer's pictureJamal Saafir

BlackRock & Barclays Turn To JPMorgan Blockchain For Settlements

Updated: Oct 19, 2023

According to a report from BeInCrypto, JPMorgan Chase & Co., the largest US bank by assets, has concluded its first collateral settlement by blockchain with success.

This significant transaction was accomplished through its Tokenized Collateral Network (TCN), which converted shares from BlackRock Inc. into digital tokens for an over-the-counter derivatives trade with Barclays.

This is an infrequent occasion of a bank-developed blockchain application being commercialized. It also underlines the potential efficiency gains of such innovative technology in the financial sector.

Tyrone Lobban, head of Onyx Digital Assets at JPMorgan, said, “Using the bank’s blockchain network Onyx Digital Assets meant the collateral moved almost instantaneously, compared with over the course of a day.”

The TCN expands the scope of assets that can be used as collateral, including equities and fixed income. Ed Bond, head of trading services at JPMorgan, explained, “Institutions on the network can use a wider scope of assets to meet any collateral requirements they have on the back of trading.”

The blockchain application is now live, with a stream of other clients and transactions on the way. This development is anticipated to make financial transactions more smooth and efficient, by increasing speed and potentially lessening risks in times of market pressure.

“Money market funds play an important role in providing liquidity to investors in times of high market volatility,” said Tom McGrath, deputy global chief operating officer of the cash management group at Blackrock. He continued, “The tokenization of money market fund shares as collateral in clearing and margining transactions would dramatically reduce the operational friction in meeting margin calls when segments of the market face acute margin pressures.”

JPMorgan also operates a system called JPM Coin, a blockchain-based system for wholesale clients to make dollar and euro-denominated payments. With it, the bank has processed approximately $300 billion since its launch.

Nonetheless, the institution of JPM Coin has brought on speculation about its potential impact on other cryptocurrencies, such as XRP. As a stablecoin, JPM Coin is pegged to the US dollar, offering security vital for large-scale transactions within JPMorgan’s wholesale payments operation. Unlike XRP, which is open to the public, JPM Coin is a closed network solution within JPMorgan Chase’s ecosystem.

Despite its closed network design, the recent introduction of euro-denominated payments for JPM Coin suggests a broader expansion plan, possibly expanding its utilization and market reach.

JPM Coin accounts for a fraction of JPMorgan’s daily $10 trillion payments but its prospective growth is immense. The ability to execute payments in shorter periods of time than traditional transactions could mean a significant shift in the industry.

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